Key Highlights
Italian central bank executive advocates for tokenized European payment infrastructure
Proposal aims to modernize SEPA framework for digital currency era
Initiative seeks to balance innovation with regulatory oversight
European authorities evaluate blockchain integration for payment systems
Digital currency development accelerates alongside payment modernization efforts
The European payment infrastructure landscape faces mounting calls for transformation as blockchain technology reshapes financial transactions. Chiara Scotti, Deputy Governor at the Bank of Italy, has urged European regulators to evaluate integrating tokenization into SEPA’s existing framework. Her recommendations emphasize maintaining regulatory authority while embracing technological advancement and ensuring financial system stability.
European Payment Framework Modernization Gains Momentum
Speaking at a conference in Rome this week, Scotti emphasized the need for comprehensive assessment of existing infrastructure. She argued that Europe must look beyond simply introducing novel payment mechanisms. According to her perspective, regulators should prioritize evaluating how current frameworks can accommodate tokenized transaction settlement.
The Single Euro Payments Area currently provides Europe with unified infrastructure for non-cash transactions denominated in euros. This system facilitates cross-border transfers throughout European Union member states and additional participating nations. Consequently, implementing tokenization within SEPA could leverage its established reach, regulatory framework, and compatibility standards.
As a significant contributor to eurozone payment operations, the Bank of Italy holds considerable influence over infrastructure decisions. Simultaneously, the European Central Bank progresses with its digital currency initiatives. Scotti’s public statements therefore carry substantial significance in shaping Europe’s payment evolution trajectory.
Monetary Authorities Address Digital Currency Challenges
Recent financial technology developments have introduced alternative forms of privately-issued digital currencies. These innovations encompass electronic money tokens and tokenized commercial bank deposits operating on blockchain networks. Such developments potentially disrupt conventional banking intermediation models.
According to Scotti, monetary authorities must safeguard their policy effectiveness while facilitating beneficial innovation. She emphasized that currency value stems from institutional credibility, legal frameworks, and public confidence. Technical features such as transaction velocity and programmable functionality alone cannot establish monetary worth.
The euro zone operates through a dual-layer monetary architecture combining central bank currency with commercial bank deposits. Blockchain-based tokenization may necessitate modifications to this established structure. SEPA infrastructure could serve as the connecting mechanism between public and private digital money forms.
Central Bank Digital Currency Initiatives Influence Broader Policy
The ECB has made substantial progress in developing technical foundations for its digital currency project. This initiative seeks to preserve central bank currency relevance within consumer payment contexts. Additional considerations include user privacy protection, financial accessibility, systemic stability, and transaction efficiency optimization.
Recently, the ECB formalized partnerships with three international standards organizations. These pilot programs focus on online transaction processing capabilities for the prospective digital euro. Furthermore, these efforts align with European objectives to establish payment system independence.
SEPA infrastructure processed a substantial portion of European cashless transactions during 2025. ECB statistics indicated non-cash payments totaled 116 trillion euros during the initial six-month period. As such, incorporating tokenization into SEPA would impact one of the world’s largest payment networks.
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